As per the national steel policy the government of India has targeted 300 MT steel capacity by 2030. However, high input cost, rising debt have posed a major challenge before the industry. The steel industry is actively working on several fronts to resolve the issues says Dr. Aruna Sharma, union Steel secretary.
High freight cost has been a major concern for the steel industry in India impacting its competitiveness. What is your strategy to in this front?
In India, the input costs are high in steelmaking compared to the world. We have an advantage of iron ore and disadvantage of not having cooking coal so our strategy is to explore alternative mechanism for the transport of iron ore as well as the finished goods. RINL has used the Sagaarmala recently (the string of sea ports on India’s coast) and other are following. We have to reduce our dependency on railways by increasing use of slurry pipelines, using the Sagaarmala so that our dependencies on railways are only to the extent of the hinterlands.
The railway freight cost has not come down because we were asking them to reclassify iron ore to that of coal so that the costs come down. It’s still under discussions. It’s (availability of rakes) phenomena that needs constant liasoning between steel and railways. There was a period of deficit now it seems to be improving, and is in the process of normalizing.
The Steel industry is reeling under high debt. What is the way out?
If you look at the steel assets, the plants are not in any big problem, they have excellent EBIDTA but the problem is of their balance sheet. I am very sure the steel sector will be the first to get processed under the NCLT process. As the steel ministry we wish it to be resolved as early as possible so the focus can move to expansion and productivity.
Is there any plan by the steel ministry to take control of iron ore and cooking coal?
We are advocating a thought process that the entire sector’s life cycle decision making should have open deliberations with all stakeholders before we form any policy. It’s not direct control that may be mandatory but that any intervention we do on iron ore or other raw material it’s important that we get the steel ministry on board.
Is there any structure or method being planned for this ?
It is under deliberation but yes we have created a platform where input subsidy of steel is being taken so that policy formulations are holistic and the voice of all stakeholders are take as inputs.
Is there any policy being worked out to secure the raw material linkage of the industry ?
The mines are now provided by auction route. Meanwhile, the mining policy is currently, being revisited let’s see how it emerges, we have given our inputs, we are actively involved in the mining policy, and if need be the relevant amendments will also be processed. I’ll share the details when it’s right enough.
By when you are expecting the mining policy to come out?
It is likely to come out soon. The Supreme Court had given Dec 31 as a deadline, but they have requested for a little more time. I am very sure before we close this financial year it should be in place.
Do you expect a disruption or shortage as many mining leases lapses in 2020 ?
I do not think so. The ministry of mines has already started discussion on it. They should start the process by 2018 end or 2019 beginning.
Is the idea of indexing or a pricing mechanism for iron ore, long pending, working out?
No such plan for the time being. But when all the mines would opened up automatically it will ensure that iron ore prices don’t go haywire.
Imports of Iron ore has gone up in the last few months..
Only low grade iron ore imports have gone up. Also prices have gone up, but that is because the mines are closed. but the moment the mines become operative it will be ok.